Frequently asked questions

A blockchain is a decentralized database that records transactions on a network of computers. In contrast to traditional databases, where a central authority controls the data, the blockchain works via a distributed and trust-free network, which increases transparency, security and data integrity. Once a data set has been added to the blockchain, it is very difficult to change it. To ensure that all copies of the database are the same, the network performs continuous checks. Blockchains have been used as the basis for cryptocurrencies such as Bitcoin, but there are many other uses, such as tokenizing illiquid assets.

Smart contracts are automated contracts that are stored on the blockchain and are triggered as soon as certain criteria are met. They work on the principle of “if... then...”. A smart contract could be used in the event that a token is automatically transferred from wallet “A” to wallet “B” as soon as the criteria “C” (e.g. receipt of money) and “D” (approval by the issuer) are met.

Smart contracts are often used when tokenizing assets to automate the entire process, reduce the role of intermediaries and associated costs, and eliminate the need to invest additional effort in regulating and managing the entire process, improving overall efficiency.

The immutability of blockchain is a cornerstone of its concept. It ensures that data once recorded on the blockchain can virtually no longer be changed or deleted. This attribute is achieved through cryptographic hashing, in which each data block contains a unique fingerprint (hash) of the previous block. Any attempt to change a single block would require recalculating the hash for that block and all subsequent blocks, which would require the consent of the majority of the network. This consensus mechanism, combined with the decentralized nature of blockchain, makes unauthorized changes extremely difficult.

Blockchain technology is generally considered to be very secure due to its decentralized and transparent nature. Its basic mechanism, which records every transaction in a block and links it to both previous and subsequent transactions, creates an immutable ledger. In addition, the consensus protocols used in many blockchains make it very difficult for an individual user to change past transactions, which further increases security.

The transparency of blockchain results from its public and decentralized nature. All participants in a blockchain network have access to the same information, so transactions and data are visible to all authorized parties. This openness creates trust among those involved, as they can independently review and control records without having to rely on intermediaries or third parties.

Tokenization is the process of recording claims in the form of a digital representation on a blockchain. This may include claims on tangible assets such as art and real estate, but also on financial instruments such as bonds. These tokens represent ownership of the underlying asset and can be bought, sold, and traded digitally.

A digital asset refers to any form of digital representation of a value that can be owned or controlled by a person. It covers a wide range of items, including cryptocurrencies, digital art, digital collectibles, digital financial instruments, intellectual property, and more. These assets are usually stored and transacted on the blockchain, which ensures their security, immutability, and verifiability. Digital assets have grown significantly in popularity and value in recent years, offering new opportunities for investment, ownership, and decentralized applications.

In the context of blockchain and cryptocurrency, a token means a unit of value or a digital asset that is created and managed on a blockchain platform. Tokens can represent various types of assets, rights, or functionalities within a specific ecosystem. Technically speaking, “token” is just another word for digital assets.

In the financial sector, tokenization has gained significant traction as it offers several benefits, such as:

- Fractional ownership: Tokenization allows assets to be divided into smaller units and thus the acquisition of fractions. This opens up investment opportunities for a larger group of people who may not have the means to purchase entire assets.

- Increased liquidity: Tokenization makes it easier to create secondary markets for traditionally illiquid assets. Digitizing assets and presenting them as tokens makes it easier to buy, sell, and trade them on digital exchanges, which can free up liquidity and reduce transaction costs.

- Streamlined processes: Tokenization automates various aspects of traditional financial processes, such as issuance, compliance, and settlement. Smart contracts can be programmed to automatically perform certain actions, such as interest payments, reducing the need for intermediaries and increasing operational efficiency.

They are digital representations of financial securities that are stored on a blockchain. In Germany, they fall under the Electronic Securities Act (eWpG) and are subject to special requirements with regard to their registration and custody. They have the same protection and tradability as securities in paper form.

The eWPG made it possible to issue bearer bonds, Pfandbriefe and certain fund shares in purely electronic form.

In Germany, the Electronic Securities Act (eWpG) provides that the task of managing the crypto securities register is supervised by BaFin. For this purpose, the legislator has defined the registration of crypto securities as a financial service within the meaning of the KWG.

NYALA's subsidiary, Smart Registry GmbH, has received preliminary approval as a crypto securities registrar, meaning that all crypto securities issued via the NYALA Digital Asset Platform are fully regulated and successfully registered with BaFin.

All of our tokenized securities are fully compatible with the traditional financial ecosystem. After tokenization, the securities are documented in the WM Securities Register, the publicly accessible register of all issuers covered by WM Datenservice. The WM Securities Register currently contains more than one million financial instruments, which are issued both traditionally on paper and digitally, and there is no end in sight. The World Cup securities register thus covers almost all of Europe and comprises the most common financial instruments worldwide.

WM Datenservice also issues and manages the International Securities Identification Number (ISIN) for unique identification of German financial instruments worldwide.

Yes, crypto securities can be traded on secondary markets. The European DLT pilot regime offered some industry players the opportunity to apply for a license to operate a multilateral trading system based on DLT to trade tokenized financial instruments.

NYALA is building the first regulated cross-platform for trading tokenized bonds, structured products and — soon — stocks. This ecosystem will enable issuers, crowdfunding platforms and other relevant players to expand their product offerings and provide investors with a path to liquidity and marketability of their investments.

If you'd like to find out more, visit our dedicated page.

With the NYALA Digital Asset Platform, you can easily tokenize your assets. Issue a regulated security token, NFT, or other type of asset in simple steps and distribute it to desired recipients. Schedule a quick call with one of our experts and we'll introduce you to the world of digital assets.

NYALA's advanced custody solution ensures the highest level of security for your digital securities. With cutting-edge features such as multi-signature, our platform uses bank-grade security measures to protect your tokenized assets and sensitive information.

Our platform is aimed at companies of all sizes and enables them to take advantage of the benefits of tokenizing digital assets. Whether you're a crowdfunding company with multiple investment projects, a real estate company looking for liquidity, or a global bank looking to expand its product offering, NYALA simplifies the issuance process with just a few clicks.

We are licensed under the German Electronic Securities Act (eWPG) to issue fully compliant tokenized securities. We provide you with all necessary tools and functions to meet the legal requirements in your jurisdiction.

By connecting with our API, you can easily integrate our tokenization engine with your platform's interface to ensure a seamless investor experience. Alternatively, you can use our web portal to start creating tokens even faster.